Proposals to deregulate the market for community pharmacy may end up cutting services patients need, says Richard Lewis

To the casual observer, the Office of Fair Trading seems to have it in for community pharmacists. Last year, resale price maintenance (RPM) on over-the-counter medicines was abolished. Now, the OFT is proposing that ‘control of entry’ regulations for community pharmacies be dismantled.¹

These latest proposals have caused alarm among smaller, independent pharmacies but have been greeted with excitement by larger pharmacy chains (‘multiples’) and supermarkets.² The demise of local pharmacy services has been predicted for many years and yet, despite the odds, these services have largely survived (the abolition of RPM did not lead a fifth of pharmacies closing as predicted by trade organisations). However, abolition of control of entry appears to present a rather more potent threat.

What is the OFT proposing?

Currently, pharmacies can only obtain a contract to dispense NHS prescriptions if they successfully navigate complex regulatory procedures. By and large, applications will be refused if pharmacy services are already available in the same neighbourhood. As a result, the number and location of community pharmacies has remained remarkably stable over many years.

To the proponents of the status quo, this represents desirable continuity of care. To the OFT, it represents a fixed market where the consumer loses out through high prices and lack of competition. It proposes that all control of entry regulations should be dismantled and that the market be allowed to determine the volume and location of community pharmacies. This will, the OFT suggests, lead to around ?30m savings for consumers on non-prescription drugs. In addition, consumers are likely to enjoy the fruits of greater competition, such as longer opening hours.

Analysis by the OFT suggests that access to services will not be adversely effected, even if two pharmacies were to close as a result of each new market entrant. It also asserts that elderly and low-income populations will not be relatively disadvantaged in terms of access.

What effect will the OFT proposals have?

While these proposals may be bad news for individual pharmacists (for example, goodwill value in their businesses is likely to be destroyed overnight), should the wider community be concerned? There are grounds to think that it should.

The deregulation of the market is likely to see a radical shift in the distribution of community pharmacy services. Certainly, supermarkets will take the opportunity to create more in-store pharmacies. Many of these will be ‘out-of-town’.

In addition, we will see a return to the ‘leap-frogging’ that characterised the time before control of entry. Pharmacies will move ever closer to the source of their dispensing income – the GP surgery. Indeed, it seems likely that many surgery developments will include their own pharmacy. This may offer some advantages in terms of access to dispensing services following a visit to the doctor.

But what of the other therapeutic roles of the pharmacist? Each day six million people visit a pharmacist, many of whom receive general health advice, treatment for minor ailments and support in taking over-the-counter medicines. For these patients, the loss of a valuable neighbourhood health service may result.

There may also be wider losses. Community pharmacies could become part of the more general trend towards a loss of local shops and services that is blighting many communities. According to the New Economics Foundation, ‘ghost town Britain’ saw a 20 per cent loss of local shops and services between 1995 and 2000. If this trend continues, a third of the remainder will disappear by 2010. This has important (and negative) consequences for local communities, including a loss of local employment, a poor environment due to car-based shopping and an overall loss of social capital.³

Deregulation is also likely to strengthen the hands of the large pharmacy multiples relative to the independents. Deep corporate pockets will be able to establish and maintain new pharmacies until the competition is seen off. This will shift the balance of ownership even more decisively in favour of multiples (which already have half the pharmacy contracts).

According to the OFT, competition between pharmacies will drive up the quality and range of services. However, research by the King’s Fund suggests that independents are more likely than multiples to offer a broader range of pharmacy services (although they are less likely to quality assure services through clinical governance). Increasing the proportion of pharmacies owned by multiples may actually serve to decrease the range of services on offer to the public.⁴

The OFT investigation has concentrated on the price of medicines. What it has not considered is the impact of the changes on the delivery of broader pharmaceutical services. The national pharmacy contract is currently being renegotiated and new local pharmaceutical services schemes are just getting off the ground. The key challenge for the NHS is to secure the right professional services for patients, amid ample evidence that the contribution of pharmacists to patient care is woefully under-utilised.

Primary care trusts’ planning and commissioning role looks set to be undermined by the unleashing of commercial pressures over which they have no control. While deregulation may offer price benefits for the consumer, there may be a sting in the tail for the patient and for the citizen.